UK Employment-Related Securities (ERS) Reporting: A Complete Guide

What is Employment Related Securities (ERS) reporting?

Employment Related Securities (ERS) reporting is a legal obligation for UK companies that provide employees or directors with shares, share options, or other financial instruments as part of their remuneration or incentive programs.

ERS reporting applies to a wide range of share-related arrangements, including:

• Tax-advantaged schemes: Enterprise Management Incentive (EMI), Save As You Earn (SAYE), Company Share Option Plans (CSOP), and Share Incentive Plans (SIP).
  
• Unapproved or bespoke schemes: Any other form of equity or security awarded outside the approved plans.

Even if no transactions occur in a given tax year, companies are often required to submit a nil return to HMRC to confirm that no reportable events took place.

Additionally, ERS reporting is not limited to UK-based employees — short-term visitors or employees who have moved abroad may still trigger reporting obligations if they receive share-related benefits. 

This ensures that all share-based incentives linked to employment are properly documented and monitored for compliance.

When does Employment Related Securities (ERS) reporting apply?

UK employers must report ERS events to HMRC to ensure compliance, transparency, and proper tax monitoring. 

Common ERS events generally fall into three main categories:

1. Acquisitions of securities (direct awards of shares)

Employees or directors receive shares or other securities outright, either outside formal option schemes or through specific share plans that deliver shares directly.

These events are reportable regardless of whether they trigger immediate tax.

Examples include:

• Restricted Stock Units (RSUs) that vest during the tax year
• Gifts of shares to reward performance or loyalty
• Shares acquired under a Share Incentive Plan (SIP)

2. Share options (grant, exercise, lapse, or cancellation)

Share options are conditional rights to acquire shares in the future. HMRC requires separate reporting for each stage of an option’s lifecycle.

• Grant: When an option is awarded, the company must report the terms (grant date, exercise price, and any conditions). No immediate tax may apply, but HMRC monitors potential future liabilities.
  
• Exercise: When the option is exercised and converted into shares, it must be reported separately. This may trigger income tax and National Insurance contributions (NIC).
  
• Lapse/cancellation: Options that are cancelled, lapse, or are otherwise adjusted must also be reported.

Examples include EMI options granted or exercised under an approved scheme, SAYE options exercised at the end of the savings period, and CSOP options exercised.

3. Other reportable events (transfers, disposals, and changes)

Certain events that change the ownership, rights, or tax treatment of securities are also reportable, even if no new shares are issued.

Examples include:

• Disposals above market value, including sales to connected parties
• Disposals where market value is artificially enhanced
  
• Vesting of restricted shares  (when shares are no longer subject to forfeiture)
• Changes to rights attached to securities (e.g. voting or dividend rights)

What are share plan reporting obligations for Short-Term Business Visitors (STBVs)?

Even if an employee is in the U.K. only briefly under an Appendix 4 Short-Term Business Visitor (STBV) agreement (which normally relaxes payroll reporting obligations), share-based awards still need to be reported to HMRC.

The Employment Related Securities (ERS) Manual now makes clear that all share awards and options held by internationally mobile employees covered by Appendix 4 must be included in the annual ERS return.

Many employers previously assumed that the Appendix 4 easement extended to share plan reporting, and therefore excluded these awards from returns. HMRC has clarified that this is not the case.

The obligation exists even if no U.K. income tax liability arises, because the reporting requirement is about transparency and compliance, not just tax collection. HMRC can impose fines (up to £5,000) for returns with material inaccuracies or omissions that are not corrected.

Which companies does Employment Related Securities (ERS) reporting apply to?

The legal responsibility for ERS reporting rests with the UK employing company, regardless of whether the parent company is based in the UK or overseas. This ensures that HMRC can track share-related benefits for all employees working under a UK entity.

1. UK parent companies

If the company is wholly UK-based, it must report all share or option transactions for its employees and directors. This includes tax-advantaged schemes (EMI, SAYE, CSOP, SIP) as well as unapproved share schemes.

2. Overseas parent companies

Even if the parent company is located outside the UK, any UK employing company in the group is still responsible for filing ERS returns for employees working in the UK. This prevents gaps in reporting for multinational organizations.

How to file your Employment Related Securities (ERS) return?

You must file an annual ERS return for every scheme registered with HMRC, even if there’s been no activity (file a nil return).

1. Prepare your return

• Download the correct end-of-year return template (CSV or ODS) from the HMRC website.
  
• Enter details of all equity-related events from the previous tax year (6 April – 5 April).
  

2. Gather the required information

• For EMI, CSOP, and SAYE returns, you will need:
  
  • Dates of any new option grants
    
  • Exercise prices
    
  • Unrestricted Market Value (UMV) / Actual Market Value (AMV)
    
  • HMRC valuation reference (if market value was pre-agreed)
    
  • Dates and tax implications of any option exercises, lapses, or cancellations
    
• For SIP returns, you will need:
  
  • Type and number of shares awarded (e.g. free, matching, partnership, or dividend shares)
    
  • UMV at the time of acquisition
    
  • Number and UMV of shares removed from the plan (through withdrawals or forfeitures), with dates and tax implications
    
  • Number of employees who met or exceeded the individual grant limit
    
• For other ERS schemes, you will need:
  
  • Broader employee, company, and grant details
    
  • Disclosure of non-standard arrangements (e.g. securities issued below market value or adjustments for non-UK residence)
    

3. Log in to HMRC Online services

• Sign in using your Government Gateway ID and password (set up when you registered the scheme).
  
• Go to the Employment Related Securities (ERS) section.
  
• Select “View schemes and arrangements”, choose the relevant scheme, then click “Submit annual return” for the correct tax year.
  
• At the start of the process, confirm whether you are declaring activity or filing a nil return.
  

4. Submit the return

• Upload your completed return file (HMRC accepts only CSV or ODS formats).
  
• Enter employer and scheme details if prompted (company name, address, registration number, Corporation Tax reference, subsidiaries if applicable).
  
• Review the information carefully before submitting.
  

5. Get confirmation

• Once your return is accepted, HMRC will provide a submission reference number.
  
• Keep this reference on record as proof of filing.

Employment Related Securities (ERS) deadline

• 6 April: The ERS reporting window opens for the prior tax year. Companies can begin preparing and submitting their returns at this time. Starting early allows sufficient time to collate employee data, verify information, and resolve any discrepancies.
  
• 6 July: The final deadline for submitting the annual ERS return for the previous tax year. Returns submitted after this date are considered late, regardless of reason.
  

Penalties for late or incorrect Employment Related Securities (ERS) returns

HMRC applies escalating penalties for late submissions:

• £100 immediately after 6 July if the return is not filed
  
• £300 on 6 October if the return remains outstanding
  
• £300 on 6 January of the following year if still unfiled

FAQs on Employment Related Securities (ERS) reporting

1. What is an ERS report?

An ERS report is the annual return that employers must file with HMRC for any registered share scheme or employment-related securities arrangement. It records all share or option activity in the previous tax year (6 April to 5 April), such as grants, exercises, awards, or cancellations. Even if there has been no activity, you must submit a nil return for each registered scheme.

2. What is ERS compliance?

ERS compliance means meeting HMRC’s requirements for:

• Registering all employment-related share schemes online.
• Filing an accurate ERS return for each scheme by the deadline.
• Reporting all “reportable events”.
• Keeping correct and complete records to support the information submitted.

Failure to comply can result in penalties and potential tax exposure for both the employer and employees.

3. What are ERS reportable events?

ERS reportable events include any transactions or changes relating to employment-related securities. Examples include:

• Granting new share options (e.g. under EMI, CSOP, SAYE).
• Employees exercising, lapsing, or cancelling share options.
• Shares awarded or removed under a Share Incentive Plan (SIP).
• Securities acquired at below market value.
• Adjustments due to non-UK residency or corporate events (e.g. reorganisation).

The exact reportable events depend on the type of scheme. HMRC provides specific templates for EMI, CSOP, SAYE, SIP, and “Other” arrangements.

4. What is the ERS submission deadline?

The ERS return must be filed with HMRC by 6 July following the end of the tax year. For example, the 2024/25 return (covering 6 April 2024 – 5 April 2025) must be submitted by 6 July 2025.

Late or incorrect submissions can result in automatic penalties, starting from £100 and increasing if the return remains outstanding.